Altman Z-Score Calculator

Altman Z-Score

Z-score is a statistical tool for foreseeing the chances of a company about to get bankrupt. It represents the creditworthiness of a company from publicly available data. Altman Z-Score Calculator is an online aid to such statistical calculations.

This concept of Altman Z-Score was developed by Edward I Altman in the 1960s with the aim of evaluating the default rate of listed manufacturing companies. Later on, it was revised for private and non-manufacturing concerns as well.


For Calculating Z-Score, consider the following formula:

For Public Company:

Z-Score = x1*1.2 + x2*1.4 + x3*3.3 + x4*0.6 + x5*0.999

For Private Company:

Z-Score = x1*0.717 + x2*0.847 + x3*3.107 + x4*0.420 + x5*0.998

For Non-Manufacturing Company:

Z-Score = x1*6.56 + x2*3.26 + x3*6.72 + x4*1.05


  • x1 = Liquidity Factor = Working Capital / Total Assets
  • x2 = Leverage Factor = Retained Earnings / Total Assets
  • x3 = Profitability Factor = EBIT / Total Assets
  • x4 = Solvency Factor = MV or BV of Equity / Total Liabilities
  • x5 = Activity Factor = Net Sales / Total Assets

About the Calculator / Features

The Altman Z-Score Calculator calculates the Z-score of different types of companies, that is, public, private or non-manufacturing concerns. To calculate Z-score using Altman Z-Score Calculator, the user has to input the accurate figure of the following data:

  • Working capital
  • Retained earnings
  • EBIT (Earnings before Interest & Tax)
  • MV or BV of equity
  • Total liabilities
  • Net sales
  • Total assets


How to Calculate using Calculator

The user has to input the following figure to obtain a Z-score of the different types of companies in seconds. He is simply required to put the following details into the calculator.

Working Capital

Working capital is an important indicator of short-term liquidity. It can be obtained by subtracting current liabilities from current assets.

Retained Earnings

It is that portion of the profit which is retained by the company after distributing dividends to equity shareholders. It is the surplus profit left with the company which it uses for future investments and growth of the company.


EBIT or Earnings Before Interest and Tax determines the operating income generated by the company. It does not consider the interest and tax amount for the purpose of calculation.

MV / BV of Equity

For calculation of the Z-score of a public company, the user has to insert the market value (MV) of the share of the company. And, since the shares of a private company are not publicly traded, they cannot have market value, and therefore, the user is required to provide the book value (BV) of the shares.

Total Liabilities

Total liabilities are the sum total of all short-term as well as long-term liabilities of a company.

Net Sales

Net sales are a result of total sales less sales returns.

Total Assets

Total assets of the company include all current and non-current assets of the company.

All the above figure can easily be obtained from the company’s financial statements.

Example of Altman Z-Score

Suppose Mr. X, an investor, is willing to invest in a company. He has two options, that is, to invest in A Ltd. or B Ltd. The details of the two companies are as below:

ParticularsA Ltd. ($)B Ltd. ($)
Working Capital250,000440,000
Retained Earnings500,000(100,000)
MV / BV of Equity1,500,0001,170,000
Total Liability500,0001,500,000
Net Sales500,0001,800,000
Total Assets1,000,0002,000,000

Z-Score of A Ltd.:

(0.25*1.2) + (0.5*1.4) + (0.25*3.3) + (3*0.6) + (0.5*0.999) = 4.1245

Z-Score of B Ltd.:

(0.22*1.2) + (-0.05*1.4) + (-0.03*3.3) + (0.78*0.6) + (0.9*0.999) = 1.4621


For a public company, a score less than 1.81 means the company has a high chance of getting bankrupt. A score between 1.81 and 2.99 defines the medium chances of bankruptcy, while a score of more than 2.99 is treated as good. It means a company is far away from the possibility of getting bankrupt.

In the example above, Company A has a very good score of 4.125, which simply means that company A is not at the risk of bankruptcy. While Company B, even after having more assets than company A is at the risk of bankruptcy.

For a private company, a score of less than 1.23 defines a high chance of bankruptcy. A score between 1.23 and 2.9 defines the mild chances of bankruptcy, while a score of more than 2.99 is treated as good.

In the case of a non-manufacturing company, a score less than 1.1 is treated as very bad, while more than 2.6 is a good indicator of solvency.

Sanjay Borad

Sanjay Bulaki Borad

Sanjay Borad is the founder & CEO of eFinanceManagement. He is passionate about keeping and making things simple and easy. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms".

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